Stocks have historically outperformed most other asset classes with their returns. Thus, it is prudent to invest in stocks to achieve long-term financial goals. However, when investing for the long term, one must focus on fundamentally strong companies with the ability to deliver solid sales growth. Further, investors should look for companies that are profitable or can achieve profitability soon.
Against this backdrop, here are my top three Canadian stocks poised to deliver massive returns over the next decade.
A pure-play, clean energy stock
For long-term capital gains, one could consider investing in clean energy stocks. The growing adoption of green energy, favourable policies, and increased investment in the sector provide ample growth opportunities. Within this space, pure-play renewable energy company Brookfield Renewable Partners (TSX:BEP.UN) remains my top pick.
The company sports an installed capacity of 31,600 megawatts and a robust development pipeline, which positions it well to capitalize on the higher demand. Further, its low operating costs, long-life assets, and long-term contractual arrangements enable it to deliver strong financials, which support its stock price.
Looking ahead, its 126,000 megawatts of developmental pipeline, commissioning of new capacity, and long weighted average remaining life of its power-purchase agreements augur well for growth. At the same time, its highly contracted power output and inflation indexation will enable it to grow organically.
Besides capital gains, investors will likely benefit from its growing dividend. It has increased its dividend at a CAGR (compound annual growth rate) of 6% for over two decades and plans to grow it further by 5-9% in the coming years.
A fast-growing financial services company
From clean energy, let’s move to financial services. Within this sector, I am bullish about goeasy (TSX:GSY) stock. The company provides lending services to subprime borrowers. Moreover, it has been growing rapidly. For instance, goeasy’s revenue has a CAGR of 19.4% in the last five years. At the same time, its EPS (earnings per share) increased at a CAGR of 32.9%.
goeasy stock has witnessed a pullback due to macroeconomic uncertainties. However, the momentum in its business has carried over in 2023, making it a compelling buy near the current levels.
The company’s top line is projected to increase at a double-digit rate, led by higher consumer loan originations, product expansion, and omnichannel offerings. Further, the high-quality originations, stable credit quality, and operating efficiency will support its margins and EPS growth.
While goeasy stock is well positioned to beat the broader market averages with its growth, its shareholders will also benefit from the growing dividend payments.
The e-commerce giant
With the ongoing digital transformation, e-commerce giant Shopify (TSX:SHOP) is well positioned to deliver massive returns over the next decade. The stock has witnessed a stellar recovery so far in 2023. Despite the recent growth, Shopify stock is trading at a discounted valuation, providing a solid entry point for long-term investors near the current levels.
Shopify is expected to benefit from its growing gross merchandise volumes and merchant base. Moreover, partnerships with social media companies and innovative products like Shopify POS and Capital bode well for growth.
The company is focusing on streamlining its operations and delivering profitable growth in the coming years. Meanwhile, the growing e-commerce penetration will support its growth.
